When people think of economics they think of studying money. However, economics extends beyond this. Economics studies the division of (scarce) resources. As a result, scarcity, a lack of resources, is a very interesting topic in economics, but it far extends money.
Imagine you’re in a restaurant. You are reading the menu, trying to decide what to have. Then your eye falls on the “specials.” Dishes that are only made in this restaurant, and can’t be had anywhere else. Or dishes that have limited availability, quantity or timewise. You can have the veal today, but not tomorrow.
Let me give you a second scenario. OnePlus is a Chinese smartphone provider that released their first phone, the OnePlus One, about five years ago. Although the specs were lined out on their site and available to all, the company had nothing really going for it. The smartphone market is massively competitive and close to being saturated. If you want to enter, you need to compete with a capital “C.” Now OnePlus could have pulled all the stops: the best specs, celebrity endorsements, online marketing (read: spam). But no, instead of bludgeoning us all to death with it, they provided to only a few. The OnePlus’ release was limited in quantity. Not only that, only the people who had bought from the first batch were able to provide a maximum of three others with an invite to buy the phone. No invite, no phone!
The strategy of OnePlus might seem incredibly counterintuitive of the aggressive marketing strategies that we are used to. However, from a behavioural economics perspective, it makes a lot of sense. As with the restaurant example, when putting an air of urgency or exclusivity around a product or service, people tend to want it more. People can experience serious FOMO: fear of missing out. It is a massive decision driver. The fear of potentially missing something great is too much for many. It’s a way to ensure we will never have to face another person with the sentence: “No, I did not try that.” And them responding with: “What a shame, it was the best thing I have ever experienced.” The negative feelings experienced then are often too much for many.
Letting exclusivity influence our decision-making is not necessarily an issue. In the restaurant example, the reasoning is that you can always come back to try another “standard” dish. Which is perfectly correct reasoning, if you were planning or are likely to go back to the restaurant. And if the dish was actually exclusive, because often, this is just another marketing ploy. How do I know this? A waiter in Ljubljana, Slovenia told me the restaurant he worked at had already served the “exclusive” veal for five years. That’s not something they casually tell us tourists!
When it comes to negotiating strategies, urgency can make or break a deal. I have once heard the story of someone trying to sell a car. He posted it online, there was demand, people wanted to come see the car. He planned slots for people to see the car. Trick is, he planned the slots with slight overlap. When one person was at the end of their appointment, weighing costs and benefits having “experienced” the car, the next person would already turn up. Both possible new owners would meet each other. They would realise that another was vying for something they wanted, or at least, considered wanting. Humans are competitive. Becoming the new owner of the car was almost a competition. The statement: “there is a lot of demand,” works even better if you can actually see the demand. In front of you, checking out what is supposed to be your car. All of a sudden, without having fully conceived the notion in your mind, you are shaking the hand of the previous owner, making sure you get to the car first. Sucker.
I’m not hating the strategy. I’m loving it. God knows how often it got to me, if I wasn’t so damn indecisive! Who would have thought that would ever be an asset?! Anyway, the strategy works. OnePlus has released the OnePlus Six and it is as successful as its previous phones. It has become a serious competitor within the smartphone market. To be honest, besides its initial exclusivity, it’s a good brand with a very competitive pricing, so its success is not too farfetched. But that initial invite-system gave the phone the hype it needed to make an impact. It differentiated OnePlus enough to give it a solid start. Round of applause please.
Going from the company to the consumer side: let’s focus on you again. When people try to sell you something with time constraints: “buy now, the deal will be over tomorrow,” or exclusivity: “we are only selling 100 items. Buy now to be one of the lucky few!” You might want to take it with a grain of salt. Most of the time, this will just be marketing ploys. Nothing more. If I go back to Ljubljana now, that veal will still be on the menu. Admittedly, I did really enjoy it. And before you ask, yes, I do have a OnePlus phone, which I am also very happy with. I will stay with this brand for quite a while. I never said I was immune to the trick. I too, tongue in cheek, want to be one of the lucky few!
I have mentioned negotiation tactics in this article. Next article I will fully dedicate to my favourite negotiation tactic: shutting up. Yes, you read that right. The next article will be about the power of silence. Silence as a tool for getting what you want!